Entity: IRR
IRR, short for Internal Rate of Return, is a financial metric used to calculate an investment's rate of return. It is the interest rate that makes the net present value of cash flows equal to zero. IRR is a key tool in evaluating the profitability of investments and projects.
IRR
Etymology
The term IRR stands for Internal Rate of Return.
Definition
IRR is a financial metric used to measure an investment's performance by calculating the interest rate that makes the net present value of cash flows equal to zero.
Historical Context
IRR has been widely used in finance and investment analysis since its development. It provides a way to evaluate the profitability of investments over time.
Cultural Significance
IRR plays a crucial role in decision-making processes for businesses, investors, and financial analysts. It helps in comparing different investment opportunities and assessing their potential returns.
Related Concepts
- Net Present Value (NPV)
- Return on Investment (ROI)
See Also
A financial metric used to measure an investment's performance by calculating the interest rate that makes the net present value of cash flows equal to zero.